Fox throws anti-net neutrality pie at Cablevision in carriage wars

Fox TV's arguments against a Cablevision backed petition for FCC rules to …

The hand-to-hand rhetorical combat between Fox Television and Cablevision continued on Monday as both sides blamed each other for the blackout of Fox TV stations WNYW, WWOR, and WTXF for greater New York Cablevision subscribers. The carriage contracts between the stations and Cablevision expired on Friday at 11:59pm, and the parties couldn't agree on how much Cablevision should pay Fox to keep it going.

The shutdown even extends to Fox TV fare Cablevision broadband subscribers can view over Hulu.com.

Cablevision has thrown up a petition that subscribers can send to Fox owner News Corporation protesting what the carrier sees as the network's intransigence. "In these economic times it is wrong and unfair to demand $150 million in fees from Cablevision and its customers," the statement begins.

Meanwhile Fox station WNYW pushes back that Cablevision has a helluva nerve calling News Corp greedy. "We offered Cablevision the exact same price that other companies are paying for our stations," WNYW's general manager insists."But for some reason, Cablevision thinks that it deserves special treatment."

Behind the scenes of this dogfight, the cable companies and TV networks are struggling over proposed new Federal Communications Commission carriage negotiation rules that would make these last-minute food fights less likely. What's interesting about the TV network responses to those proposals is that they're deploying the same arguments against them that the cable industry makes against net neutrality rules.

A formal process

Petitioned for by Time Warner Cable, Cablevision, and other providers, under these rules the FCC would set up an ongoing dispute management system, plus a "formal process to assure interim carriage" once good faith talks went past a contract deadline.

TWC and Cablevision's petition is a little hazy about this, but presumably the Commission would tell TV stations not to just take their programming off a cable stream if negotiations reach an impasse and a "retransmission consent" contract has expired. During post contract carriage talks, the cable company would continue to pay the broadcaster its current rate.

"Interim carriage eliminates brinksmanship as a negotiating tool, thereby reducing the risk of programming loss for consumers and ensuring that negotiations produce reasonable and non-coercive rates for retransmission consent," they wrote to the FCC in March. The proposals would also limit the kinds of demands that TV networks could make of cable providers during negotiations, especially for extras like buying network owned independent channels.

Fox and the other networks—CBS, NBC Universal, Disney, and Univision—deploy a variety of arguments against these suggested reforms. But what stand out are the responses that are nearly identical to the cable industry's reasons for opposing rules that would bar ISPs from unfairly discriminating against or prioritizing content or applications over the 'Net.

First Amendment

Fox and friends (pun intended) argue that their First Amendment rights would be violated by a government supervised retransmission consent process.

As the Supreme Court has made clear, video programming networks "engage in and transmit speech, and they are entitled to the protection of the speech and press provisions of the First Amendment." All video programming channels, just like newspapers or magazines, have First Amendment rights to speak and to distribute their content as they see fit. Any FCC decision that interferes with broadcasters' right to control their speech would be subject to heightened constitutional scrutiny. Given the abundance of competition in the video programming marketplace, the Commission could not possibly justify a regulation of speech as narrowly tailored in furtherance of an important governmental objective.

On the face of it, the cable industry should wholeheartedly agree with this statement. Here's what National Cable and Telecommunications Association CEO Kyle McSlarrow said about rules limiting data prioritization on the Internet, which McSlarrow suggested would impair the First Amendment rights of content providers.

"The First Amendment protects the right not just to decide what to say, but how to say it," he argued. "Does the First Amendment really allow the government to prohibit a content or applications provider from paying to acquire the means to distribute its content in the form or manner it wishes? Such a rule would ultimately decrease the overall amount of speech on the Internet, thus harming, not helping, First Amendment interests."

Both parties are essentially making the same argument here. The First Amendment doesn't just protect a content provider's speech, but the means by which she chooses to transmit it.

Equally unavailing

Next, the networks dig right into Comcast vs. FCC to kick TWC/Cablevision's proposals in the groin. In the Comcast case, the Commission argued that it had implied or "ancillary" authority based on various provisions in the Communications Act to issue sanctions against the ISP for P2P blocking.

Comcast (successfully) pushed back that the agency's decisions were, in fact, ancillary to little more than a series of policy statements—hardly the materials from which to fashion legal rules. The DC Circuit Court of Appeals agreed with that objection.

Fox pulls out the same playbook in its response to cable arguments that the agency has the power to beef up its retrans consent regulations.

"The Petitioners' citations to various categories of the FCC's ancillary authority are equally unavailing," Fox et al write. "As the D.C. Circuit recently made abundantly clear, the Commission’s ability to rely on ancillary authority is limited; it can invoke ancillary jurisdiction only to take an action reasonably linked to an express grant of statutory authority.

"Quite clearly," they add, "neither a mandatory standstill nor binding arbitration can be considered reasonably ancillary to any express provision in the Act."

There may be an apples-and-oranges problem in this analogy. The cable petition invokes actual regulatory sections (as opposed to policy statements) in the Communications Act.

These include paragraph (i) of Section 4 ("Provisions related to the Commission"): "(i) The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions."

And paragraph (r) of Section 303 ("General Powers"): "The Commission shall [m]ake such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this Act."

But like those policy statements, these provisions are pretty open ended, Fox TV's response notes. "The Commission has no jurisdiction to adopt the reforms proposed in the Petition, and Petitioners have offered no persuasive evidence to the contrary."

And so there you have it—TV broadcasters hijacking the cable industry's arsenal of anti-net neutrality arguments to defeat a set of good suggestions for cooling down the retrans consent wars.

Our sympathies go to cable in this instance. The TV networks are, in essence, licensed monopoly carriers of over-the-air broadcast content. The Communications Act requires the cable companies to transmit their fare. Thus, deploying some simple rules of the road to prevent the broadcast networks from unfairly leveraging their market power seems very reasonable.

The FCC as fair play referee over digital content networks—even the cable industry sometimes likes that idea, it seems. Maybe it's time to stop coming up with clever legal arguments against the concept, which we're all going to need from time to time.

44 Reader Comments

Sounds an awful lot like the disagreement News International's UK subsidiary Sky TV had with the cable company Virgin Media about a year ago where Virgin refused to pay Sky's fees so Sky withdrew a number of channels. It all got sorted out a few months later. See http://www.marketingweek.co.uk/news/sky ... 81.article

On one hand I love seeing the cable providers finally not getting their way. As a monopoly in almost every market they almost always get their way. Now they aren't getting their way and they go complain like spoiled little children to their mommy (the FCC).

Unfortunately the only people getting hurt in this whole situation are the customers. They're now getting less content, the monopoly cable companies will still treat them like crap and raise rates every year. Hopefully these despicable fights will lead to more people cutting the cord from cable providers and switching over to Hulu and Netflix and other alternatives.

On one hand I love seeing the cable providers finally not getting their way. As a monopoly in almost every market they almost always get their way. Now they aren't getting their way and they go complain like spoiled little children to their mommy (the FCC).

Unfortunately the only people getting hurt in this whole situation are the customers. They're now getting less content, the monopoly cable companies will still treat them like crap and raise rates every year. Hopefully these despicable fights will lead to more people cutting the cord from cable providers and switching over to Hulu and Netflix and other alternatives.

But then, without Net Neutrality you might have to pay extra to be able to Stream Hulu and Netflix...

"Hopefully these despicable fights will lead to more people cutting the cord from cable providers and switching over to Hulu and Netflix and other alternatives."

Fox also blocked Cablevision customers from accessing their content on Hulu. In many places, the cable monopoly extends to broadband as well. I'm generally not a big fan of regulation, but there is no real competition in US broadband. We desperately need line sharing.

I believe that is something that has existed since the beginning of time.

I still feel no sympathy for the cable networks. They are getting their arguments turned on them and my wishful, yet delusional, thinking is that they might think a little more about the arguments they make for something they want just to get more money, rather than what is best for us the consumer.

Basically, the TV channels what to keep the right to go on strike in order to secure better pay.

What's more interesting is it's always the O&Os that are getting into the fights. And then, because they link the carriage of their local stations with their cable-only siblings. So basically they act like the Teamsters or even better, like the Hollywood unions striking in solidarity (like when the SAG folks walked with the Writer's Guild guys a couple of years ago).

I believe that is something that has existed since the beginning of time.

I still feel no sympathy for the cable networks. They are getting their arguments turned on them and my wishful, yet delusional, thinking is that they might think a little more about the arguments they make for something they want just to get more money, rather than what is best for us the consumer.

But they won't. You know that. If they are ever even forced to acknowledge that these are their own arguments being used against them, they will utterly and categorically deny anything other than that can absolutely have it both ways whenever they want.

The only sensible way to approach this is to separate out the transmission medium and infrastructure from the content. It wouldn't take all that much regulatory action to allow cable companies to charge a flat rate for service, and to pass through (maybe with a fixed markup) per-subscriber fees for content. Let users decide what channels they want and pay their $15 for service plus $0.10/month for NBC, $0.40/month for Fox, etc.

If a content provider wants to raise rates, fine, that just flows to consumers' bills (with some kind of advance notice and maximum delta requirement).

The current pricing and payment systems are so disconnected from the way that people consume content that it's simply never going to make any sense. Cable will become a dumb pipe soon enough, but until then, why not move the pricing issue to be between broadcasters and consumers, where it belongs?

Personally, I think that any network that airs ads should not be allowed to charge companies to carry their shows...

after all, a customer can get the local Fox affiliate for free by putting up an antenna; why should the cable company have to pay even more money? Fox makes money off of every person who watches that station; it only makes sense to get as many viewers as possible.

My view is that public television networks should be made free to cable/satellite providers in the same manner they are free OTA. Anything beyond that should be fair game and subject to the same free market rigmarole as any other industry.

I don't understand the free speech argument. I thought the first amendment was about the right to speak, not the right to control what I said. Copyright is where you get distribution rights. I'm failing to see a constitutional argument for either this or net neutrality.

I don't understand the free speech argument. I thought the first amendment was about the right to speak, not the right to control what I said. Copyright is where you get distribution rights. I'm failing to see a constitutional argument for either this or net neutrality.

Privately, I can never understand why corporations were given the right of human beings. They are not human beings - they are just organizations. This is not intended to be an argument against capitalism, just an observation. Perhaps they should be given a different set of rights and responsibilities. Today it seems that they have all of the human rights, but less of the responsibilities.

On the other hand, if this prevents people from getting Fox News and their appalling level of content, then all the better. If only the rest of News Corporation declines as well ... perhaps we would have fewer people constantly watching disinformation.

It seems to me that it would be more reasonable for the cable companies to charge for carrying a signal than to pay for it. After all, they extend the reach of broadcast signals, and make the distribution of cable only signals possible in the first place.

Sounds an awful lot like the disagreement News International's UK subsidiary Sky TV had with the cable company Virgin Media about a year ago where Virgin refused to pay Sky's fees so Sky withdrew a number of channels. It all got sorted out a few months later. See http://www.marketingweek.co.uk/news/sky ... 81.article

It seems to me that it would be more reasonable for the cable companies to charge for carrying a signal than to pay for it. After all, they extend the reach of broadcast signals, and make the distribution of cable only signals possible in the first place.

it doesnt work that way. if my cable company doesnt resign with CBS Corp., and doesnt have CBS/CW/Showtime anymore, and i want CBS, CW, and Showtime, im going to switch to a cable or satellite company that does have them. instead of competing for customers on strictly price point, theyll have to start competing on networks offered. and the same example works for the other 5 major media conglomerates (NBC Universal, News Corp, Walt Disney, Viacom, and Time Warner).

I don't understand the free speech argument. I thought the first amendment was about the right to speak, not the right to control what I said. Copyright is where you get distribution rights. I'm failing to see a constitutional argument for either this or net neutrality.

Privately, I can never understand why corporations were given the right of human beings. They are not human beings - they are just organizations. This is not intended to be an argument against capitalism, just an observation. Perhaps they should be given a different set of rights and responsibilities. Today it seems that they have all of the human rights, but less of the responsibilities.

On the other hand, if this prevents people from getting Fox News and their appalling level of content, then all the better. If only the rest of News Corporation declines as well ... perhaps we would have fewer people constantly watching disinformation.

I wonder if the supremes have considered the ad absurdum argument: can a corp run for President? If the answer is no, they seriously need to reconsider there previous decision(s) of a corporations rights.

after all, a customer can get the local Fox affiliate for free by putting up an antenna

Unfortunately, this isn't feasible for most. While I can get it, I'm relatively close the Empire State Building transmitter that News Corp uses. Most of my friends have no way to get an OTA signal from the problem stations without erecting a rather tall tower.

Cablevision raises their rates a bit every year, usually a few dollars. With an estimated 4 million subscribers, Cablevision will have to raise rates $1.66/mo for every subscriber to give News Corp another $80 million. Of all the shows on My9 and Fox, the only ones I'm even remotely interested in are Seth McFarlane's and J.J. Abrams's, and I usually watch those on Blu-ray, Hulu, or Adult Swim. As a subscriber, I'm completely behind Cablevision on this one and would rather see News Corp's feed permanently cut rather than pay $1.66 for something my OTA antenna and HTPC pick up just fine for the rare times I want to watch them.

Broadcast channels need to remember their place. They are BROADCAST CHANNELS. If they wanted to be premium priced channels then they should shut down their broadcast transmitters and become Cable/FiOS/Satellite-only.

You lose the sports channels too.. I had to switch to Directv just to watch baseball and hockey.. it really sucked because other than losing out on sports that I love I was happy with my other service and I supported their stand against fox and co. for as long as I could.. I still feel dirty about it..

As much as I would like to agree with you, the precedent that it sets is rather disturbing. The bottom line is that if the industry was as competitive as some claim then this impasse problem wouldn't even exist in the first place. Fox wouldn't be in a position the raise the rates like this considering they are not offering anything which is substantially better than what they offered under the previous rates. That should be a main focus here.

What's stopping a cable company...say like Comcast...to make a political stand this coming election season and saying "you know what, we don't support this political party, so we're going to block all access to their websites, candidates and videos. People will just get re-routed somewhere else"? I mean, this is currently possible and legal isn't it?

Sure, it would probably be very bad for an ISP to do this...but there's really nothing stopping it, is there? Hey, let the free market decide, right?

I believe that is something that has existed since the beginning of time.

I still feel no sympathy for the cable networks. They are getting their arguments turned on them and my wishful, yet delusional, thinking is that they might think a little more about the arguments they make for something they want just to get more money, rather than what is best for us the consumer.

But they won't. You know that. If they are ever even forced to acknowledge that these are their own arguments being used against them, they will utterly and categorically deny anything other than that can absolutely have it both ways whenever they want.

Sorry, for that is what I meant. I was just hopping they could see they are just trying to have everything in there favor.

Matthew Lasar / Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz.